WEAKER RINGGIT, OIL PRICES: TNB assessing impact on operations and finances
TENAGA Nasional Bhd (TNB) is
assessing the impact of the falling ringgit and global oil prices on its operations and finances as it finalises its first-quarter results. TNB chief financial officer Fazlur Rahman Zainuddin said the weakening ringgit would cause a translation loss for the group but maintained that it was too early to make any estimates.
“We are looking at how to mitigate the effects, which includes the overall impact of the weak ringgit on coal prices, which have also gone down,” he said after its annual shareholders meeting, here, yesterday.
TNB, Southeast Asia’s largest utility company, has total debts of RM25.4 billion, of which 12 per cent are US dollar-denominated loans, 13 per cent in yen and the rest in ringgit and other currencies.
A weaker ringgit means it has to fork out more to pay its foreign-denominated loans, which could hurt earnings.
On another matter, TNB chairman Tan Sri Leo Moggie said it was conducting a due diligence on 1Malaysia Development Bhd’s (1MDB) offer of a stake in a 2,000-megawatt coal-fired power plant in Port Dickson, Negri Sembilan.
“We received the offer a few months ago but we will not respond to it yet as the due diligence has not been completed.”
The RM11 billion Jimah East power plant is a joint venture between 1MDB and Japan’s Mitbillion sui & Co Ltd. TNB is said to have been offered up to a 35 per cent stake.
The first unit of the Jimah East coalfired power plant is scheduled to be completed by end-2018 and the second unit by mid-2019. However, 1MDB has asked for a six-month extension.
Leo Moggie also said TNB would increase its investments in alternative energy sources.
It is embarking on the Jengka biomass project and two other projects with Sime Darby Bhd.
The group’s focus on renewable energy (RE) is in line with the government’s aspiration to increase RE contribution to five per cent by 2020 from less than one per cent now.
“TNB is also looking at importing energy from Sarawak’s hydroelectric projects and we are in discussions with Sarawak Energy, but it is not going to be realised soon, probably in five years or beyond 2020,” he said.
Meanwhile, TNB president and chief executive officer Datuk Seri Azman Mohd said the falling oil prices were “neutral” to TNB as 53.8 per cent of its generation mix was gas and 35.3 per cent coal.